—Bloomberg: “Supreme Court Justice Anthony Kennedy has been had. “A campaign finance system that pairs corporate independent expenditures with effective disclosure has not existed before today,” he confidently wrote in his majority opinion in Citizens United, the Court’s 2010 decision that freed corporations, unions and others to spend unlimited sums on electioneering. … Justice Kennedy appeared blissfully unaware that his guarantee of disclosure was misplaced. Though his ruling left contributions subject to the disclosure requirements of the McCain-Feingold campaign finance law, those requirements were rendered meaningless by a government agency pursuing a contrary agenda. … The court’s embrace of disclosure could hardly have been clearer. Yet we now have a system awash in anonymous donations to shadowy political groups. According to the reform-minded Center for Responsive Politics, advocacy groups spent approximately $305 million in the 2010 midterm federal elections, more than quadrupling the $70 million spent in the 2006 midterms. Few of these groups disclosed their donors; the “transparency” promised by Justice Kennedy is nonexistent. … What went wrong? The answer lies buried in the graveyard of election-law enforcement: the Federal Election Commission. In 2007, prior to Citizens United, the FEC issued a little-noticed “interpretation of law” that narrowed the scope of the McCain- Feingold disclosure requirements. The law itself specifies that disclosure is required of “all contributors” of $1,000 or more to groups running electioneering communications. The FEC interpretation changed that, requiring disclosure only of contributors who gave money “for the purpose of furthering electioneering communications.” Of the commission’s six members, all three Democrats and one Republican voted for the change — the result of a compromise that kept another Republican commissioner from achieving an even more extensive gutting of disclosure rules.”

COLT RELOADS LOBBYING EFFORT

—AP: “For nearly a decade, Colt Defense went without a lobbyist. The legendary gun maker based in West Hartford, Conn., had an exclusive deal to provide combat rifles to the U.S. military and didn’t need a hired gun looking out for the company’s interests in Washington. … Times have changed. After buying more than 700,000 Colt M4 carbines, the Defense Department has started a search for the rifle’s successor, giving Colt’s competitors the long-awaited chance to break the company’s grip on the market. So Colt turned to Roger Smith, a former deputy assistant Navy secretary-turned-lobbyist, to be the company’s voice in D.C. His fee is $120,000 a year.”

STUDY: POLITICAL INFLUENCE LED TO MORTGAGE BOOM-BUST

—NYT: “The study, by Deniz Igan, Prachi Mishra, Thierry Tressel, three economists at the International Monetary Fund, suggests that implicit subsidies and a lack of regulation helped make it possible for lenders to offer lower rates on mortgages that were increasingly likely to default. My fellow Economix blogger Simon Johnson has also noted the interplay of political influence on regulation and finance. … The study by the I.M.F. economists found that the heaviest lobbying came from lenders making riskier loans and expanding their mortgage business most rapidly during the housing boom. The loans originated by those lenders were, by 2008, more likely to be delinquent. … Most important, lobbying meant access to tax dollars. The lenders lobbying more heavily were 7 percent more likely to receive bailout funds, received larger amounts of those funds, and enjoyed a 27 percent greater increase in their market capitalization in October 2008, the month the bailout program was announced.”

IRS MAY ON DARK MONEY GROUPS

—HuffPo: “Top Republican political strategist Karl Rove’s method of secretly funneling unlimited contributions from big donors was so hugely successful in the 2010 campaign that Democrats are now trying to copy it. But his model may yet end up backfiring spectacularly. … In one scenario, groups like Rove’s Crossroads Grassroots Political Strategies could find themselves subject to massive fines, ranging as high as 35 to 70 percent of the money they received in secret donations. … In another scenario, their deep-pocket donors could be hit by a 35 percent tax on their contributions. … But contrary to popular belief, Rove’s group has not formally attained 501(c)(4) status. The group’s application, requesting the IRS to classify it as a “social welfare” group, is still pending. … And while the designation is typically not much more than a formality — organizations routinely call themselves (c)(4) groups before they’ve been formally approved — tax and campaign finance experts contacted by The Huffington Post said the IRS could well deny Crossroads GPS’s application.”